In the Net Present Value (NPV)method, After-Tax Cash Flows Should

question 4

True/False

In the net present value (NPV)method, after-tax cash flows should be used instead of pre-tax cash flows when taxes are a consideration.

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Definitions:

Payback Period

The amount of time it takes for an investment to generate an amount of income or cash equal to the cost of the investment.

Disposal Value

The estimated monetary value of an asset at the end of its useful life.

Annual Cash Revenues

The total money received from sales activities, without accounting for any deductions or costs, over the course of a year.

Hurdle Rate

The minimum rate of return on an investment that is required by a manager or investor to proceed with the investment.